| Ramzi Chamat
The real estate market in Switzerland is experiencing a significant recovery in the second quarter of 2024, marked by a widespread increase in prices in all regions of the country. This positive trend contrasts sharply with the previous year, which was characterized by a nationwide drop in prices. Several factors have contributed to this recovery, including falling interest rates and increased demand for real estate. This RealAdvisor release presents a detailed analysis of price developments, transaction volumes and economic and political influences, while offering an optimistic outlook for the Swiss real estate market for the remainder of 2024.
The Swiss real estate market experienced a notable recovery in the second quarter of 2024, characterized by a widespread increase in prices across all regions. This positive trend stands in stark contrast to the previous year, where a nationwide decline in prices was observed. A combination of several factors, including lower interest rates and increased demand, played a decisive role in this recovery.
Over the past three months, house and apartment prices in Switzerland have risen by +0.6%. This growth is evident in all 15 major urban areas of the country. Over a 12-month period, apartment prices have increased by +1.9%. Zurich and Geneva each recorded a +1% rise in apartment prices, while Basel saw a more modest increase of +0.2%.
Regarding single-family homes, prices increased by +1.0%. Zurich saw a +0.9% increase, Geneva +0.6%, and Lucerne recorded the highest increase with +1.2%. Basel, however, is the only city to show a decline in single-family home prices, with a -0.4% decrease compared to the previous year.
Cantons with advantageous tax regimes continue to show solid performance. Apartment prices in Zug increased by +1.9%, while house prices rose by +1.6%. Nidwalden saw a +2.4% increase for apartments and +1.8% for houses. Similarly, Obwalden experienced a +2.3% increase for apartments and +2.0% for houses.
Despite rising prices, transaction volumes remain lower than last year. In 2023, the number of transactions had already decreased significantly compared to 2022, with notable declines recorded in Geneva (-4.7%) and Zurich (-6.6%). This decrease is primarily attributed to a limited supply of properties and a lack of new constructions, thus restraining market activity.
However, a slight rebound is expected in the second half of 2024. The recent drop in interest rates is expected to favor the normalization of transaction volumes. Rebound prospects are also reinforced by favorable international political factors. For example, recent political decisions in the UK and France are making Switzerland increasingly attractive to foreign investors, thereby contributing to the positive dynamics of the real estate market.
The economic and political context plays a crucial role in the current dynamics of the Swiss real estate market. The continued decrease in interest rates by the Swiss National Bank is one of the main factors stimulating demand. This accommodative monetary policy makes real estate financing more accessible, thus encouraging property purchases.
Simultaneously, international political events also impact the Swiss real estate market. For example, the abolition of the non-dom status in the UK and the election of a Labour Prime Minister create a favorable climate for foreign investments in Switzerland. Additionally, the results of parliamentary elections in France have reinforced the perception of Switzerland as a stable and attractive investment destination.
Prospects for the Swiss real estate market remain optimistic for the rest of 2024. The combination of low interest rates, limited supply, and growing demand should continue to support price increases. Real estate market analysts predict that this upward trend will continue, with ongoing price increases for houses and apartments in all regions.
The growing demand for real estate in Switzerland is fueled by several factors. On one hand, Switzerland remains an attractive country for expatriates and foreign investors due to its political stability, advantageous tax system, and high quality of life. On the other hand, low interest rates make mortgages more affordable, thus encouraging real estate purchases.
In terms of supply, the construction of new properties remains limited, contributing to price pressures. Challenges related to obtaining building permits and the availability of buildable land hinder the expansion of real estate supply. This imbalance between supply and demand is a key factor in the continued price increase.
Each region of Switzerland presents distinct characteristics in terms of real estate price dynamics. Cantons with advantageous tax regimes, such as Zug, Nidwalden, and Obwalden, continue to attract buyers thanks to their favorable tax conditions and high quality of life. These regions record price increases above the national average.
Major cities like Zurich and Geneva, although experiencing more moderate price increases, remain attractive hubs due to their economic importance and top-notch infrastructure. Lucerne, with a notable increase in house prices, shows increased demand, likely due to its proximity to Zurich and its tourist attractions.
Basel, despite a slight decrease in house prices, continues to be a stable market with sustained demand for apartments. This divergence in price trends between houses and apartments could be attributed to specific local factors, such as the availability of land and buyer preferences.
In conclusion, the Swiss real estate market is in a solid recovery phase, supported by favorable economic and political factors. The price increases observed in all regions of the country reflect increased demand and limited supply. Low interest rates play a crucial role in facilitating real estate financing, while Switzerland's attractiveness to foreign investors reinforces the market's positive dynamics.
For the rest of 2024, the outlook remains optimistic. House and apartment prices should continue to rise, supported by robust demand and low interest rates. Regions with advantageous tax regimes and major cities like Zurich, Geneva, and Lucerne will likely continue to attract buyers, while the limited real estate supply will maintain price pressures.
Real estate professionals must remain vigilant regarding international political and economic developments, as these factors can significantly influence market dynamics. Ultimately, the combination of economic stability, accommodative monetary policy, and Switzerland's attractiveness as an investment destination should support the continued growth of the Swiss real estate market.